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Another Shake-Up at HP as Networking Head Bethany Mayer Is Reassigned (Memo)

Mayer will run a new business unit that will be announced later this month in Barcelona.

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In the wake of an executive reshuffling at the top of its two biggest business units last year, the management changes at computing giant Hewlett-Packard are continuing. Bethany Mayer, an HP senior vice president and head of its $2.5 billion networking equipment business unit, has been reassigned to run a new business unit, sources familiar with the move confirm to Re/code.

The change has been announced internally and is expected to be made public ahead of HP’s earnings announcement on Feb. 20. Mayer will continue to run the networking group in the short term, but sources familiar with the situation described the move as a transition during which she will eventually be replaced as HP’s networking head and will devote herself full time to running the new unit. A replacement to run the networking unit, which employs about 6,000, has not yet been named.

Mayer’s new assignment will be to build a business focused on Network Functions Virtualization. HP describes it as a new effort to rethink how certain IT systems are built inside large telecommunications service providers, a segment of the networking industry where HP doesn’t participate meaningfully now. Sources familiar with HP’s plans say the company will announce the creation of the new business unit at next week’s Mobile World Congress in Barcelona. Mayer will report to Martin Fink, HP’s CTO and head of HP Labs.

The change was announced to HP employees Friday in an internal memo (see below) from Bill Veghte, an HP executive VP and head of its $28 billion enterprise group. In the memo, Veghte describes the new NFV unit as a “company wide initiative” that will draw from HP’s enterprise hardware business, its enterprise services group and its cloud services business.

Tapped to run HP’s networking business in 2011 less than a month after CEO Meg Whitman took over as CEO, Mayer presided over a five percent increase in HP’s networking revenue over three years. She replaced the unit’s prior head Marius Haas. Haas left HP in 2011 for a job as an industry adviser at private equity firm KKR, and is now chief commercial officer and president of Dell’s Enterprise business unit.

HP’s networking business, which fits inside Veghte’s Enterprise Group, is largely comprised of the company formerly known as 3Com, which HP acquired for $2.7 billion in 2009. In enterprise networking, it’s generally seen running second place to Cisco Systems. In December, market research firm IDC said HP was second to Cisco in enterprise ethernet switching gear, commanding a little less than 10 percent of the market, well short of Cisco’s 62 percent, but ahead of Alcatel-Lucent, Dell and Juniper. But HP doesn’t play in the service provider routing and switching market, where Cisco dominates.

The move comes in the wake of last year’s reassignment by Whitman of Todd Bradley, the former head of its PC and printing business, and Dave Donatelli, the former head of the Enterprise Group. There has since been a lot of speculation about when they might leave for jobs at other companies.

Separately, sources tell Re/code that Shinichi Koide, president and CEO of HP Japan, is retiring from the company. The 55-year-old former executive who previously worked at Softbank and IBM joined HP in 2007.

Below is the internal memo on Mayer’s new role. It was circulated to HP employees on Friday. It was from Veghte, Mike Nefkens (head of its enterprise services unit) and Fink.

To: All HP Enterprise Group and HP Cloud employees

New Leadership for Network Functions Virtualization (NFV)

In the New Style of IT, it’s increasingly clear; the world’s largest telecommunications companies are embarking on one of the single biggest technology infrastructure refreshes in the world – to dramatically reduce the cost of delivering anytime/anywhere access to voice, video and data. Concurrently, they need to increase the agility and speed to innovation needed to support the fast-growing social applications and immersive user experiences of tomorrow.

Enter Network Functions Virtualization (NFV) – an alternative design approach for building complex IT applications in the telecommunications and service provider industries. This is a great opportunity for HP to leverage the breadth and depth of our portfolio, our experience and our partnerships with network equipment providers and carriers.

What makes this opportunity even more attractive is how well it aligns with our pan-HP work in cloud and Communications and Media Solutions (CMS) work in Enterprise Services. But to actively pursue it – we need focus and leadership.

To help us win, Bethany Mayer will assume the responsibility of leading the Network Functions Virtualization (NFV) business as its SVP/General Manager. NFV will be a company-wide initiative requiring Bethany’s ability to partner with EG, ES and HP Cloud to deliver an integrated NFV solution. In addition, the NFV business requires a leader with start-up experience, strategic orientation, and knowledge of the networking space – making Bethany the ideal leader for this important opportunity.

Given the close alignment of NFV to HP Cloud, effective immediately, Bethany will report to Martin Fink in his HP Cloud leadership role. The NFV effort will join our cloud organization, which continues its operating model established last November.

The growth and success of our networking business is essential to the success of the Enterprise Group and HP. In networking, our strategy is sound and the opportunity huge – during this transition, we need to maintain continuity of leadership by having Bethany continue as HP’s Networking SVP/General Manager. We look forward to HPN extending its record of 16 consecutive quarters of growth as we close Q1 and start Q2.

Since both NFV and HPN are important full-time jobs, Bill Veghte will be actively searching for the next leader of our networking business. That leader will continue HP’s customer mandate to deliver simple and better networking solutions for the New Style of IT – and ignite the people and capabilities in HPN.

We want to thank Bethany for her hard work and contributions to our networking business, and please join us in congratulating Bethany in her new responsibilities.

Bill, Mike & Martin

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